Nepal’s trade deficit with India to cross Rs 50b

New Delhi, August 4:

The deficit in Nepal-India trade will cross Rs 50 billion during this fiscal year due to a decrease in exports to India, custom charge imposed by India and also because India has started exporting goods that were being imported from third countries earlier.

Government officials have claimed that Indo-Nepal trade deficit will increase this year. Export of goods to India from Nepal had increased after the Nepal-India trade treaty.

Joint secretary Lal Mani Joshi at Nepali embassy in New Delhi said that export of goods to India from Nepal hardly crosses Rs 40 billion while goods worth over Rs 90 billion are being imported from India. He added that the reason for growing dependency on Indian products is because India now produces most of the goods that used to be imported from third countries earlier.

He added that this difference of Rs 50 billion will increase during this fiscal year. Ever since India decided to remove the four per cent additional customs charge from only 12 primary agricultural products being imported from Nepal, export of other goods from Nepal to India has been affected adversely, Joshi said.

India has asked for a list of non-agricultural goods and products and has started doing its homework on them. The Federation of Nepal Chambers of Commerce and Industries (FNCCI) for Nepal provided a list of 71 non-agricultural goods being exported to India a month ago.

There has been a decrease in the export of garments and readymade clothes and jute products from Nepal to India. Similarly, export has also been affected due to quarantine provisions at the border.

According to Joshi, export of goods such as soap and toothpaste to India from Nepal has been affected because of the policies introduced by some Indian states like Himachal Pradesh and Uttaranchal to promote the establishment of such industries in their states.

The companies, which used to export goods produced in Nepal to India, are now being encouraged to establish industries in these Indian states.

The Chaudhari Group of Nepal has already established a noodles factory in West Bengal of India and will also establish a separate plant in Uttaranchal.

Indian industrialists have also been pressuring the Indian government to fix a limited quota on the import of jute products and Vanaspati Ghee from Nepal.

Indian federal minister for commerce and industries Kamal Nath, answering to a query from MP Sita Ram Yechuri in the National Assembly on Wednesday, said a process to limit the import of Vanaspati Ghee from Nepal to 100,000 tonne per year is going on.